Excessive closeness between Beijing and Colombo is breaching comfort levels in New Delhi

Oct 30, 2010 8:40:16 PM- transcurrents.com

By Namini Wijedasa

New Delhi is deeply worried about Beijing’s rapidly developing relationship with Colombo and is likely to raise this with Sri Lankan leaders when Indian External Affairs Minister S.M. Krishna visits at the end of November.

With Indo-Sino relationships under fresh strain during recent months — predominantly over China’s close alliance with Pakistan and apparent ‘meddling’ in Nepal — New Delhi is even more concerned about Chinese motives in Sri Lanka, diplomatic observers said. Much of this apprehension stems from the belief that Beijing is moving rapidly towards establishing a stronghold in a part of South Asia that India had traditionally dominated.

The relationship between China and Sri Lanka is deemed to be one of mutual benefit but there is undeniably a balance-of-power component that Colombo needs to take into account. Even Indian diplomats are now willing to confess — strictly confidentially — that the excessive closeness between Beijing and Colombo is breaching comfort levels in New Delhi. The reality is that there are deep disagreements between India and China on important questions.

“We don’t for a minute doubt the sovereign right of the Government of Sri Lanka to engage with foreign partners in any manner it deems fit,” a source from the Indian diplomatic corps told this newspaper.

“But we have only pointed out to the Government of Sri Lanka that given the history and closeness of our relationship and the geographical location in which we find ourselves... in taking decisions the Government of Sri Lanka will keep our interests in mind, and will do nothing that compromises the security of India.”

“There is surely a shared interest in keeping the region free of destabilisation,” he asserted. “Something in the neighbourhood that destabilises the region will cause concern.”

The key word is “destabilisation”. While India’s definition of how China might “destabilise” the region is not immediately clear, this one fear will be increasingly articulated to Colombo in future.

Post-war, both New Delhi and Beijing are dependent on development to heighten their presence in Sri Lanka. But their models are dramatically different. China moves much faster and has more flexible systems than India. It also funds massive projects of the scale India is yet to undertake. While China is already implementing many of the infrastructure ventures it is lending money for, India is still trailing. Even the coal power plant in Sampur is yet to take off.

New Delhi might claim also that it has to show more accountability than Beijing does but this is open to argument. What Colombo asks, Beijing delivers and quickly. The terms or pricing are not released but the locals seem happy, even if the projects generate no employment and much of the input — including equipment, construction machinery, materials, technical and managerial expertise — come from China even before repayment officially starts.

“We don’t do projects like this,” said the Indian diplomatic source earlier quoted. “India has very clearly said that as far as possible and to the extent possible local labour, skills and expertise will be used in the implementation of our projects. It’s only if we see that local expertise and technicians are not available that we will consider getting them from India. China follows this model of development all over Africa, too. It is packaged very attractively and marketed on the basis of ‘take-it-or-leave-it’.”

This source pointed out that there is relatively little Chinese equity investment here. Compare that with private foreign direct investment from India, he said. Bharti Airtel entered the market in March 2009 committing US$ 200 million over six years. “Today, just 18 months later, their investment is at US$ 196 million,” he said, adding also that some of the best Indian brand names and investment houses are in Sri Lanka.

He claimed Indian companies have created nearly 5000 jobs over the past few years. “These are all companies where Indian presence is minimal.... four or five people at managerial level,” he said. “We don’t see a whole lot of that from China. The Sri Lanka-India import-export ratio, meanwhile, is 1:5. With China, it’s 1:20.”

Still, New Delhi is also shackled by its political past with Colombo, much of it unpleasant. Sri Lankans remain deeply mistrustful and apprehensive of India, suspecting motives in her actions the way New Delhi suspects Beijing. All of Sri Lanka’s dealings with India are tempered by misgivings, wariness and uncertainty. Pressure by India on Colombo to sign the proposed Comprehensive Economic Partnership Agreement brought top-level Sri Lankan businessmen onto the streets.

They marched directly into Temple Trees, past the security cordon, to a meeting with President Mahinda Rajapaksa and the deal is yet to be signed. The irony was not lost.(Similarly, just one visit by Indian Foreign Secretary Nirupama Rao in September 2010 raised a hornet’s nest of questions about “what the Indians are doing here”. But numerous trips by various Chinese leaders are regularly greeted with great delight).

One of the main concerns over the CEPA is that thousands of Indian workers will flood the country, taking Sri Lankan jobs. Already nearly 8,000 Chinese workers are in Sri Lanka doing Sri Lankan jobs — unskilled or semi-skilled — but this doesn’t raise the same ire.

India trained and fostered the LTTE. India then ‘engineered’ the 13th Amendment. The unpleasant IPKF intervention followed. Because of its own involvement and large Tamil population, India had connections to Sri Lanka’s war that China never had.

Politicians in Chennai still interfere in domestic politics. A lot of Indian assistance to Sri Lanka, because of its own large Tamil population, is concentrated on the North and East. Also, New Delhi keeps making statements about political settlements and the fate of Tamils in Sri Lanka.

While it shared intelligence, crucial supplies and technical assistance with Sri Lanka during the final war, it did not — and does not stop talking — about internal matters. India maintains the position that, while the armed conflict is over, “there are always other conflicts that remain”. In short, India is an unpleasant package. China is none of that.

Nevertheless, India and Sri Lanka also have ties that are based not only geographical location but on culture and history. As much as there is acrimony on political grounds, there is affinity in many other areas

In coming months, Colombo will have to manage this balancing act delicately and with intelligence, say political observers. The reality that is Indo-Sino relations will not go away. In this equation, it is not Beijing’s interests or New Delhi’s we must worry about — it is ours.

Indian Lines of Credit from October 2004 to October 2010-10-30

-Agreement signed on October 2004 for purchase of petroleum products (without Government of India guarantee): US$ 150 million

-Agreement signed on July 2008 for upgrading of Southern railway corridor first phase: US$ 100 million

-Agreement signed on March 2008 for purchase of defence equipment/supplies: US$ 100 million
Agreement signed on March 2010 for upgrading of Southern railway corridor second phase: US$ 67.4 million

-Agreement proposed for rehabilitation of Northern railway lines (Omanthai-Pallai, Medawchchiya-Madhu, Madhu-Talaimannar and Pallai-KKS); construction of signalling and telecommunication system for northern railway lines; and supply of rolling stock: US$ 800 million

-Agreement proposed for construction of a jetty at Sampur and of transmission line from Sampur to Habarana as well as equity share of the Ceylon Electricity Board for setting up a joint venture for a coal power plant at Sampur in Sri Lanka with National Thermal Power Corporation of Sri Lanka: US$ 200 million

-Housing Project, grant for nearly 50,000 houses in former war affected areas: US$ 400 million

-Small Indian projects under consideration or being implemented between 2008 and October 2010. Total estimated grant under this is over US$ 20 million annually under the head “Aid to Sri Lanka”: